Making the Debate Over Corporate-Stakeholder Responsibility A Two-Way Conversation

1. Making the Debate Over Corporate-Stakeholder Responsibility A Two-Way Conversation Andrew C. Wicks (and Jerry Goodstein) Associate Professor Co-Director, The Olsson Center Academic Advisor, BRICE

2. Introduction • Core Idea: To come to terms with what we mean by “business ethics” and to be able to foster ethics within business, we need to discuss the responsibilities of both Corporations AND Stakeholders. • Meaning of Responsibility: • Things that we should attend to; • Things that arise out of obligations we take on. • Three Specific Meanings of Responsibility (following Bowie) • SR-R (Reciprocity) • SR-I (Interdependence) • SR-A (Accountability)

3. Background • Current Focus of Literature: • Responsibility of Corporations (with Stakeholder Theory and Corporate Social Responsibility) • Understandable Given Import/Power/Size of MNC’s • Our Goal: • Not to Drop the focus on CR • Not to argue that Corporations need a break or that more responsibility should shift to Stakeholders • Focus on Both CR and SR; Both matter and both Deserve Attention (also Bowie and Raden) • CR is Incomplete without attention to SR

4. Why Does Stakeholder Responsibility Matter? • For (At Least) 5 Reasons: • A New Way to Characterize Business Ethics • Explaining Moral Failures • Making Organizational Moral Failure Rare • Creating Organizational Excellence and Outstanding Performance • Conceptualizing and Working Through Novel Business Challenges

5. Why Does Stakeholder Responsibility Matter? • Reason #1: A New Way to Characterize Business Ethics • Goal: Connect Business and Ethics in a “Natural”/Organic Way; • SR as Promising Alternative • Language of Responsibility: Integral to Business • Distinctive Framing on Stakeholders: • Extends Focus Beyond Firms; • Gets into Day-to-Day Life of Firms • Overlaps with Other Theories (e.g. OCB; ST; CSR; Ethics); • Opportunities for New Theory Development • Rhetorical Device: Allows Managers to Engage Stakes • Provides a Normative Benchmark: Gives Firms, Stakes and Critics a Way to Assess Performance

6. Why Does Stakeholder Responsibility Matter? • Reason #2: Explaining Moral Failures in Corporations • Provides Detailed and Comprehensive Lens To Study Failures: Rich Perspective to Look at Enron, Worldcomm, Tyco, etc. • SR Helps Frame Complexity of Breakdowns: • Involves Many Stakeholders and Organizations • Need to Look at Parties involved and Their Interactions • Regimes of Responsibility: Systems of Shared Norms, Understandings and Practices that Allow Things to Get Accomplished without Ethical Failures. • Need to Understand and Unpack Regimes of Responsibility and Where/Why They Broke Down

7. Why Does Stakeholder Responsibility Matter? • Reason #3: Making Organizational Moral Failure Rare • How do we Change Organizations to Reduce Ethical Failure? • Media focus on Top Management and Boards; • Yes, But also Deeper Analysis including SR • Focus on Regimes of Responsibility: Look for Patterns in Why Regimes of Responsibility Break Down • Examine Studies on Individual and Group Stake Behavior: Use These to Design More Robust and Sustainable Regimes of Resp • Look at Best Practices for Push Back and SR • Example of eBay and Feedback Forum

8. Why Does Stakeholder Responsibility Matter? • Reason #4: Creating Organizational Excellence and Outstanding Performance • Stakeholders and Mission: Great Companies Engage Stakeholders and Make Them Passionate about the Firm/Products/Mission • SR and Excellence: To Deliver Excellence, Firms Need Stakeholders to Work Together to Fulfill Responsibilities Beyond Expectations • Needs to Drill Down into Idiosyncratic Routines and Practices that Make Organizations Flourish • SR and CA: Patterns of SR Can Become a Significant and Durable Source of Competitive Advantage (e.g. Starbucks, Southwest Airlines, and eBay)

9. Why Does Stakeholder Responsibility Matter? • Reason #5: Conceptualizing and Working Through Novel Organizational Challenges • Novel Challenges Exist: Lots of Existing Challenges Facing Society (and Business) Involve Cooperation of Both Firms and Stakeholders • Global Economy Fosters Novel Challenges: Interdependence and Shared Responsibility are Growing (across Firms and Stakeholders plus Society, Government and NGO’s) • Power of Language: SR Provides Language to Conceptualize and Engage both Firms and Stakeholders • The Environment: HP and Office Depot on e-waste • Global Labor: Nike and the FLA/WRC

10. A Research Agenda • Business Ethics: • Discussion of Responsibilities (often Omitted) Along with Rights in Business (e.g. Duties of Employees back to Firms) • Normative Theories of “Responsibility” for Stakeholders and Firms • Management Theory: • Empirical Work Focusing on Forces at Work Shaping Individual and Group Behavior (e.g. Network Theory and Organizational Design) • Theory and Empirical Studies on What Happens When Firms and Stakes Fulfill Mutual Responsibilities (e.g. does Commitment or Trust Increase?) • Linkages to Trust and Supply Chain Literatures • Leadership in Organizations: • As Agents for Creating Regimes of Responsibility that Avoid Mishaps, Enable Success and Envision New Partnerships to Address Novel Challenges

11. Current and Future Research Projects on SR • Developing Theories of SR and its Import within Organizations • Conceptual Model Looking at SR as a Variable that Impacts Specific Organizational Dynamics (e.g. like trust, commitment, capability) [Paper with Goodstein] • Empirical Testing of SR • Use of Implicit Association Test and Expressed Values in Stock Picking Exercise; • Explores Link Between Normative Orientation and Stakeholder Decision-Making[Papers with Fairchild and Goodstein] • Empirical Paper Testing Conceptual Model of SR [Future Paper with Goodstein]